Higher-rate pension tax relief: the extra 20% you have to ask for
Why 40% and 45% taxpayers in relief-at-source schemes only get 20% automatically, how to claim the rest and how far back you can go
If you pay 40% or 45% income tax and your pension scheme uses relief at source, you are probably only receiving half the tax relief you are entitled to. The other half does not arrive unless you claim it. This affects most personal pensions, SIPPs and many workplace schemes, and the unclaimed money runs into hundreds of pounds a year for a typical higher earner. Pensions are regulated products, so this is information only, not personal advice.
The two ways pension relief works
Net pay. Your contribution is taken from your salary before tax is worked out. You get full relief at your marginal rate immediately and there is nothing to claim. Most public sector schemes and many large employer schemes work this way. Salary sacrifice has the same effect.
Relief at source. Your contribution is taken from pay after tax, or paid from your bank account. The provider claims 20% basic-rate relief from HMRC and adds it to your pot. So £80 from you becomes £100 invested. If you pay 40% tax you are due £40 of relief on that £100, but only £20 has been added. The missing £20 is yours to claim.
Your pension provider or payslip will say which method applies. If the contribution line on your payslip is deducted after tax, or you pay into a personal pension yourself, it is relief at source.
How much is at stake
| Your rate | Paid in from your pocket | Added by provider | Extra relief to claim |
|---|---|---|---|
| 20% | £800 | £200 | Nothing |
| 40% | £800 | £200 | £200 |
| 45% | £800 | £200 | £250 |
Someone earning £60,000 who pays 5% of salary into a relief-at-source scheme contributes £3,000 gross a year. The extra relief is worth £600 a year, or £2,400 over the four years that can be backdated.
The extra relief only applies to the part of your contribution that falls within the 40% or 45% band. If you earn £52,000, only the £1,730 above the £50,270 threshold is taxed at 40%, so higher-rate relief is limited to contributions up to that amount.
How to claim
If you file a self-assessment return. Enter the gross contribution, meaning your payment plus the 20% added, in the pension section. HMRC extends your basic-rate band by that amount, so more of your income is taxed at 20% instead of 40%. The relief comes off your bill or increases your refund.
If you do not file a return. You do not need to start filing just for this. Contact HMRC through your personal tax account at gov.uk, by phone or by letter, giving the gross contributions for each year. HMRC will either send a refund for past years or adjust your tax code for the current one. If your contributions are regular, ask for the relief to be built into your code so you do not have to claim annually.
Keep the annual contribution statement from your provider as evidence.
Backdating
Claims can go back four tax years. In 2026/27 that means 2022/23, 2023/24, 2024/25 and 2025/26 are all still open. The 2022/23 year closes on 5 April 2027, so anyone who has never claimed should act before then.
The relief is paid back to you, not into the pension. What you do with it is your choice. Some people pay it into the pension as an extra contribution, which itself attracts relief.
Watch out for
- Assuming your workplace scheme is net pay. Many schemes used for auto-enrolment, including several of the largest providers, use relief at source.
- Being pushed over £100,000 by a pay rise. Pension contributions reduce adjusted net income and can restore the Personal Allowance, which makes the effective relief 60% in that band.
- The annual allowance of £60,000, and the tapered allowance for those with income over £260,000. Relief is only due on contributions within it.
- Contributions above your relevant earnings for the year, which do not qualify for relief at all.
- Claims companies offering to recover pension relief for a cut. HMRC does it for free.